Weekend Edition: Building bigger and better.
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Why has construction productivity lagged behind manufacturing for the past 30 years?
Construction hasn't seen the labour productivity gains that we've seen in manufacturing over the last thirty years or so, and yet there's so much pressure on housing and other construction projects to cope with our growing population. So imagine how much faster and cheaper it would be if construction matched the productivity gains of other sectors. So why isn't it? And what needs to change? That's this week. The morning call from NAB with Phil Dobby. The weekend edition. So in Q four last year, the number of new builds for housing and apartments in Australia was just forty one thousand nine hundred and eleven for the quarter. That was four point four percent down on the previous quarter, seasonally adjusted, and just five point three percent up on the year.
And now it wasn't the worst quarter, but it's a long way from the peak and there's no clear upward trend right now. In Q one two, Two thousand and eighteen, for example, that seasonally adjusted figure was sixty two thousand three hundred and eleven. That's almost fifty percent more than Q four last year. Now that Q four number last year is the last number we've got available. We get Q one for this year in a month's time. And maybe over five percent annual growth in builds isn't too bad when you've got a population growth of just one point eight percent in the year to September. Uh even at the recent peak. We only had uh a little over two and a half percent growth in the population. But the number of builds is well below the government targets, and the construction sector has been grappling with delays in materials, shortages of labor, and slow planning decisions.
And we know house prices are continuing to rise, uh somewhere over three percent for houses, edging towards five percent for apartments by various forecasts for this year. Uh interest rates obviously have an influence. But so does the availability of housing stocks. So how can it be speeded up? Well, CEDA, the Committee for Economic Development of Australia recently looked into why construction productivity is so weak in Australia. It's a report that's been written by Melissa Wilson and James Brooks, and James is with me. So, James, uh dwellings built per construction worker has declined by fifty percent since the first time. Since the nineteen seventies. That's a bit of a scary number to start with, isn't it?
It's pretty bad. It's pretty bad.
It's not great.
What do the latest CEDA statistics reveal about new housing starts and seasonal trends?
And it's been a long time coming. Are we comparing like for like? That's my I my first my first thought on that though. You know, we you know we're we're building more complicated houses, we've got higher aspirations. So that would be part of it.
of it wouldn't it? The houses are more complicated and the thing that comes up with this is size as well. But the size and uh the quality and all of these things are responding to a really complicated set of incentives. What we're showing is what we used to call a house in the seventies and now we're building half of that. So we need to be if we're serious about our ambitions, we need to be looking at everything. I think w we need to be at a number which is much closer to what we were in the seventies than now because we've also had fifty years of uh development in building technology and materials.
And when I look at the construction costs in Australia and compare it with other developed economies, because obviously it's not just the uh the productivity of the workers, it's getting uh all the materials together, uh the the bureaucracy that goes alongside it. Put all of that together and you know, the cost that you come up with and I f you know, look at the US, Canada, uh the UK. I mean the figures are broadly similar, aren't they? So this isn't a uniquely Australian problem.
Yeah, it's not a uniquely Australian problem. Um construction costs and productivity is a problem in a lot of different countries. And recently the Productivity Commission, which just to refresh, is our independent agency of government, which provides economic advice and research on productivity, showed that our construction costs are slightly above average compared to other countries and our productivity is also slightly higher.
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